In order to have a look at which sectors of the market have been driving the overall US markets higher, here is a diagram showing the relative performance of select sectors over the past 200 days from the stockcharts.com people.

This more clearly shows the outperformance by the financial, the technology and the industrial sectors of the market.  We notice that there is a movement in the materials sector ETF’s as well, (that is the light blue bar).  This is only a snap shot of the past 200 days’ performance and thus the following chart, showing performance over time is more illuminating:

This chart shows the trends over the same 200 day period, allowing us a better view of relative performance ( the baseline is the S&P which is the center line).  We can clearly see that since the early November lift off for the markets, Financials, Technology and Industrials have led the way while the laggards such as Health Care, Consumer Staples and Utilities continues underperforming.

The intriguing sectors are Basic Materials and Energy:  While they both enjoyed an initial bump with the market, they have since fallen off significantly vs the stronger sectors noted earlier, which remain strong. Both Basic Materials and Energy have been in long downtrends, so the positive bump may just be an oversold relief bounce.  If we take a look at ARNC, formerly Alcoa and FCX, Freeport McMoRan, the recent strong rallies look stellar until you realize that they are off over 70% from their highs made 6 to 7 years ago.  It’s a bit early to declare a bull market in those sectors.  Still, we’ll monitor them to see if bullish thresholds are crossed and persistent buying comes in to them.

Healthcare and Consumer Staples continue to underperform but as in all cycles, momentum on the downside will eventually turn.  When it appears as if relative strength is turning and our statistics show persistent accumulation, we will look there for a protracted up move.  HCA for example is an issue that bears watching.  In the meantime, we will avoid this group.  As we’ve noted in our methodology statement, we want to be in the strong sectors.  The old saying goes that if you want to go north, don’t get on a train going south hoping it turns around.